Tax advantage — but for whom?

Earlier this month, Josh Bilyk, president of the Alberta Enterprise Group, wrote an op-ed piece critiquing Public Interest Alberta’s efforts to advocate for fair reforms to our province’s personal and corporate income tax systems and to discuss with Albertans how additional revenues could be used for the public good.

Speaking on behalf of the business lobby group he heads, Bilyk argued for maintaining what he called Alberta’s tax advantage. But Public Interest Alberta’s “Alberta Could” campaign clearly demonstrates that our current systems of personal and corporate income tax are disadvantageous to the vast majority of Albertans.

The province’s flat personal income tax regime means that Albertans pay tax at the same percentage rate, regardless of whether they make $20,000 or $2 million per year. While this arrangement obviously benefits the wealthy, it also disadvantages those of more modest means. For example, someone with a taxable income of $60,000 would pay just over $1,100 more income tax in Alberta than in British Columbia, but someone with a taxable income of $1 million would pay over $41,000 less here than in B.C.

Alberta also currently maintains Canada’s lowest provincial corporate income tax rate at 10 per cent. Over the past 25 years, corporate profits in Alberta have skyrocketed while the province’s corporate tax rate has been cut drastically from its year 2000 rate of 15.5 per cent.

Experts from across the political spectrum have identified problems with government revenues as a key factor threatening economic well-being in Alberta. The “Alberta Could” campaign puts forth a proposal to begin to address this widely recognized problem: Impose a rate of 13 per cent on personal taxable income over $100,000 and a rate of 15 per cent on taxable income over $150,000. This arrangement would generate an additional $1 billion for the provincial treasury without increasing tax rates for over 90 per cent of Albertans. The “Alberta Could” campaign also proposes increasing the corporate tax rate to 12 per cent, a level equivalent to Saskatchewan’s and below the national average rate of 12.7 per cent, raising another $1 billion.

If adopted, the “Alberta Could” proposal would see Alberta benefit from an additional $2 billion per year to invest in the priorities of Albertans — without resorting to measures such as a sales tax or health premium that would be, as the Alberta government notes in its budget 2014 documents, “disproportionately heavier on lower income individuals.”

Bilyk and others who think like him seem convinced of the need to maintain Alberta’s status as a low tax jurisdictions, so let’s be clear: If the government implements the “Alberta Could” proposal, we would still be the lowest tax jurisdiction in Canada by a whopping $9.6 billion in comparative terms.

Let’s talk about what Alberta could achieve with fair tax reform. The “Alberta Could” campaign website highlights possibilities that would help families, build healthier communities and a stronger economy.

reinstate the child care space creation grant and the quality enhancement grant as a means of helping young families secure the child care they badly need; and

invest in sufficient public long-term care to ensure that our seniors can access high-quality care.

Fair tax reform is also the best way to tackle one of the key problems facing Alberta: economic inequality that has risen to alarming heights. In 1982, the top one per cent of Albertans made 10 times what the bottom 90 per cent made; by 2011, this had risen to 18 times. That same year, the poorest 50 per cent of Alberta tax filers received only 11 per cent of total market income, while the richest 0.1 per cent of Alberta tax filers, or just 2,755 individuals, received more than $7 billion of total market income in 2011 alone.

The “Alberta Could” campaign is promoting reforms in line with the priorities of Albertans. A recent Environics poll reveals that the top priority for most Albertans is investment in public services (47 per cent) followed by investment in public infrastructure (21 per cent) — not tax cuts (four per cent). While the percentages vary somewhat across groups, this pattern generally holds true right across the political spectrum.

The key goal of the “Alberta Could” campaign is to prompt Albertans to think in positive terms about what could be achieved through fair tax reform. We’ve all spent far too long being told what we can’t possibly afford to do here, in Canada’s richest province. We need to stop enduring the increasingly inadequate and diminishing status quo and start demanding fair tax reform and renewed investment in the priorities of Albertans.

Of course there is an “Alberta Advantage” — but the truth is that this advantage is unfairly rigged to benefit our wealthiest citizens.

It is time to demand changes that benefit all of Alberta’s families and communities.

Shannon Studen Bower is the former Research Director with Parkland Institute. She is now an assistant professor in the Department of History and Classics at the University of Alberta.
An environmental historian and historical geographer, she is primarily concerned with the Canadian prairie west.

Parkland Institute is an Alberta-wide, non-partisan research centre situated within the Faculty of Arts at the University of Alberta. Parkland Institute studies economic, social, cultural, and political issues facing Albertans and Canadians, using the perspective of political economy. more »